Chapter 4: Internal Governance Structures Within the H-Share Firm: Solving Agency Problems in a Cross-Border Environment
4. Internal governance structures within the H-share ﬁrm: solving agency problems in a cross-border environment I INTRODUCTION: THE H-SHARE COMPANY AND INSIDER CONTROL A recent study by the World Bank deﬁnes Corporate Governance as ‘the set of mechanisms available to shareholders for inﬂuencing managers to maximize the value of shareholder’s stock and to ﬁxed claimants such as banks and employees for controlling the agency costs of equity’.1 The OECD’s revised Principles of Corporate Governance deﬁnes it as follows: a set of relationships between a company’s management, its board, its shareholders and other stakeholders. Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined.2 Both of these deﬁnitions imply and accept the ‘principal–agent’ model of the corporation which has dominated much of western corporate scholarship over the past century or more.3 This model, however, is one which has increasingly come under pressure in recent years. The ﬁrst arena of questioning has been by scholars who have examined the experience of ‘transplanting’ western corporate law concepts into an alien environment – Vietnam under Doi Moi,4 for example, or China under Deng Xiaoping.5 In the case of China-focused scholars, many have concluded that, despite the undoubtedly western origin of much of modern Chinese corporations law, the modern Chinese listed ﬁrm remains a far cry from the western idea of the corporation as a ‘nexus’ of contracts between independent parties at arm’s...
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